Money Talks Louder Than Ever in Midterms

The dominant story line of this year’s midterm elections is increasingly becoming the torrents of money, much of it anonymous, gushing into House and Senate races across the country.

Television spending by outside interest groups has more than doubled what was spent at this point in the 2006 midterms, according to data from the Campaign Media Analysis Group, which tracks political advertising.

And skirmishing between Democrats and Republicans over the spending, which has overwhelmingly favored Republicans, reached a fever pitch this week, with charges and countercharges, calls for investigations and calls to block them. Suddenly, complex campaign finance regulations have been elevated to crucial political talking points.

The explanation for how these interest groups have become such powerful players this year includes not just the Supreme Court’s ruling in January in the Citizens United case that struck down restrictions on corporate spending on elections, but also a constellation of other legal developments since 2007 that have gradually loosened strictures governing campaign financing and the regulation of third-party groups.

In the end, though, it is the decision in Citizens United v. Federal Election Commission that remains the touchstone. Interestingly, the legal changes directly wrought by the case have turned out to be quite subtle, according to campaign finance lawyers and political operatives. Instead, they said, the case has been more important for the psychological impact it had on the biggest donors.

“The difference between the law pre- and post-Citizens United is subtle to the expert observer,” said Trevor Potter, a former chairman of the Federal Election Commission and a critic of the ruling. “To the casual observer, what they have heard is the court has gone from a world that prohibited corporate political speech and activity, even though that isn’t actually the case, to suddenly for the first time that it’s allowed. It’s that change in psychology that has made a difference in terms of the amount of money now being spent.”

Even before the decision, corporations had significant latitude to sponsor what appeared to many voters to be political advertisements, as long as they fell under the guise of “issue” ads. Now, they can simply be more direct. But many heads of corporations and superwealthy individual donors who were not even part of the court case have taken away a much more simplified, overarching message, according to lawyers who advise corporations on election law and to political power-players soliciting giant checks.

“The principal impact of the Citizens United decision was to give prospective donors a general sense that it was within their constitutional rights to support independent political activity,” said Steven Law, head of the Republican-leaning group American Crossroads and its affiliate Crossroads GPS, which have emerged as major players in this election. “That right existed before, but this Supreme Court decision essentially gave a Good Housekeeping seal of approval.”

Benjamin L. Ginsberg, a campaign finance lawyer at the Washington firm Patton Boggs who has advised a long list of Republican-leaning groups over the years, described the ruling as a kind of “psychological green light” for donors.

The ruling lifted restrictions on corporations, including nonprofit ones like labor unions, created by the 2002 McCain-Feingold campaign finance law, when it comes to the financing of “electioneering communications” — radio and television commercials that focus on voters and identify a political candidate, broadcast in the 30 days before a primary and 60 days before a general election.

A 2007 Supreme Court decision, however, Federal Election Commission v. Wisconsin Right to Life Inc., had already significantly weakened the restrictions. The court ruled that corporations could pay for issue-based advertisements, even ones that pointedly criticized or praised a candidate in the weeks leading up to an election, unless there was no other “reasonable” way to interpret the commercial other than as “an appeal to vote for or against a specific candidate.”

The Wisconsin Right to Life decision, in other words, already gave corporations wide berth to buy advertisements attacking or supporting candidates, as long as they were cloaked in the appearance of “issue advocacy” and stopped short of “express advocacy” — an explicit appeal for the election or defeat of a candidate. It is often hard, however, for the casual observer to tell the difference between the two.

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What Citizens United did was to ostensibly remove that remaining shackle of “issue advocacy,” enabling corporations and labor unions to sponsor advertisements explicitly calling for the election or defeat of particular candidates. The change is nuanced, but it gives heads of corporations a greater comfort level, campaign finance lawyers said.

“The risk factor for corporations to give is less,” said Lawrence M. Noble, a lawyer at Skadden, Arps, Slate, Meagher & Flom and a former general counsel for the Federal Election Commission.

Nevertheless, Fred Malek, a longtime Republican operative who is helping to lead fund-raising for the Republican Governors Association and is chairman of a new nonprofit advocacy group, American Action Network, said the ruling had seldom come up in his conversations with donors.

“I don’t find anybody who is contributing based on that ruling,” he said. “People are contributing because they have deep reservations about the policies and direction of this Congress and this administration. That’s what’s bringing them in.”

So far, however, the nightmare situation envisioned by some campaign finance watchdogs — droves of commercial corporations vying for voters’ attention through a Super Bowl-style frenzy of advertising bearing their company logos — has not materialized. Instead, corporate money is being funneled through third-party groups, many of them organized under Section 501(c) of the tax code, which can accept donations of unlimited size and generally do not have to disclose their donors under Internal Revenue Service rules. Rulemaking by the election commission after the Wisconsin Right to Life case further enabled this.

These groups had already been growing in popularity on both the left and the right in recent elections, in large part because of the anonymity afforded donors. This time, the biggest players have been on the Republican side.

Despite their newfound freedom under Citizens United, however, many of these groups had until relatively recently in the election cycle continued mostly to put out so-called issue ads, the same kinds of commercials they could have done before the ruling. The reasons many of the groups had generally sought to steer clear of more explicit appeals were most likely rooted in a desire to avoid jeopardizing their status before the I.R.S. and the election commission, which is important to being able to preserve the anonymity of their donors, campaign finance lawyers said.

Nonprofit advocacy groups are permitted by the I.R.S. to engage in political activity, so long as it is not their “primary purpose.” They are allowed to do an unlimited amount of lobbying on issues related to their core purpose. Stopping short of what would clearly be considered “express advocacy” in most of their ads enables them to better make the case to the I.R.S. they are merely doing issue advocacy.

Meanwhile, with the election commission, there is always the possibility that certain nonprofit groups will be required to register as political committees, which would force them to disclose their donors. But as long as most of a group’s advertisements are not explicit calls to vote for or against candidates, the Republican commissioners are likely to leave them alone, ruling their “major purpose” is not political, campaign finance lawyers said.

That would effectively block any action against them because the commission is divided evenly along party lines and a majority vote is needed for it to take any action.

Nevertheless, several Republican-leaning nonprofit advocacy organizations, in particular, have begun over the last month to be more aggressive in their approach, explicitly asking for voters to cast their ballots for or against candidates. It remains to be seen whether the I.R.S. or the elections commission will scrutinize their actions more closely.

A version of this article appears in print on October 8, 2010, on Page A13 of the New York edition with the headline: Changes Have Money Talking Louder Than Ever in Midterms. Order Reprints|Today's Paper|Subscribe